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Comps are FRAUDULENT, do not rely on them

By Patrick following x   2018 May 13, 3:43pm 85 views   0 comments   watch   sfw   quote     share    


https://therealdeal.com/2018/05/09/keeping-up-appearances-co-op-boards-are-using-this-trick-to-beef-up-comps-in-a-buyers-market/

When a co-op on the 34th floor of a ritzy Upper East Side building sold last year, the price was recorded as $3 million. But it actually cost closer to $2.8 million.

At closing, the buyer of the three-bedroom co-op at 425 East 58th Street received a credit of $150,000. The buyer and seller, at the behest of the co-op board, cut a deal to keep the technical sale price in line with the expected value of similar units in the building. Though the contract detailed this arrangement, public records only reflect the higher price. ...

Attorney Adam Leitman Bailey said his firm has represented lenders on two of these cases recently.
“In my humble opinion, this fraud is disgusting and should be illegal,” he said. “It artificially is making consumers believe that housing prices are higher than the market actually indicates.”
He added that banks should stick to the terms laid out in sale contracts, without getting “involved in any chicanery or fake pricing.”
These pricing arrangements are particularly common with estate sales, where the executor is often trying to sell the apartment as quickly as possible. Generally speaking, though, boards want to keep outliers — say a $2.5 million apartment in a building where apartments tend to sell for $4 million-plus — from disrupting the building’s appraisals.
“It happens all the time, irrespective of market,” said broker Frances Katzen of Douglas Elliman. “You see it more now, but I’ve seen it in strong markets too when they didn’t get a sale that they loved.”


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